Correlation Between Royal Canadian and Brookfield Infrastructure
Can any of the company-specific risk be diversified away by investing in both Royal Canadian and Brookfield Infrastructure at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Royal Canadian and Brookfield Infrastructure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royal Canadian Mint and Brookfield Infrastructure Partners, you can compare the effects of market volatilities on Royal Canadian and Brookfield Infrastructure and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Royal Canadian with a short position of Brookfield Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Canadian and Brookfield Infrastructure.
Diversification Opportunities for Royal Canadian and Brookfield Infrastructure
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Royal and Brookfield is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Royal Canadian Mint and Brookfield Infrastructure Part in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Infrastructure and Royal Canadian is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Royal Canadian Mint are associated (or correlated) with Brookfield Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Infrastructure has no effect on the direction of Royal Canadian i.e., Royal Canadian and Brookfield Infrastructure go up and down completely randomly.
Pair Corralation between Royal Canadian and Brookfield Infrastructure
Assuming the 90 days trading horizon Royal Canadian Mint is expected to under-perform the Brookfield Infrastructure. In addition to that, Royal Canadian is 1.35 times more volatile than Brookfield Infrastructure Partners. It trades about -0.1 of its total potential returns per unit of risk. Brookfield Infrastructure Partners is currently generating about 0.36 per unit of volatility. If you would invest 2,155 in Brookfield Infrastructure Partners on September 2, 2024 and sell it today you would earn a total of 198.00 from holding Brookfield Infrastructure Partners or generate 9.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royal Canadian Mint vs. Brookfield Infrastructure Part
Performance |
| Timeline |
| Royal Canadian Mint |
| Brookfield Infrastructure |
Royal Canadian and Brookfield Infrastructure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Canadian and Brookfield Infrastructure
The main advantage of trading using opposite Royal Canadian and Brookfield Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Canadian position performs unexpectedly, Brookfield Infrastructure can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Brookfield Infrastructure will offset losses from the drop in Brookfield Infrastructure's long position.| Royal Canadian vs. Royal Canadian Mint | Royal Canadian vs. iShares Gold Bullion | Royal Canadian vs. Sprott Physical Gold | Royal Canadian vs. Purpose Gold Bullion |
| Brookfield Infrastructure vs. Royal Canadian Mint | Brookfield Infrastructure vs. Cymbria | Brookfield Infrastructure vs. BMO Aggregate Bond | Brookfield Infrastructure vs. iShares Canadian HYBrid |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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